Devcon closing more branches

Reductions in company expenses and streamlining are designed to ‘set the stage for future success,’ CEO says
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Wednesday, July 11, 2012

HOLLYWOOD, Fla.—Devcon Security—a super-regional based here that grew to a national player in the past year and a half—is downsizing to reduce expenses and strengthen the company’s finances for future profitability and growth, according to Devcon’s new CEO, Steve Hafen.

Among the changes will be a winding down by the end of the year of operations at Devcon’s new 23,000-square-foot national operations center in Irving, Texas, Hafen said.

“Devcon has experienced many changes over the past 18 months, including an aggressive growth initiative and subsequent streamlining of some branch operations,” Hafen said in a statement provided to Security Systems News. “As we look to set the stage for future success, we have made the decision to suspend some additional branch operations and reduce overall company expenses. These reductions, though difficult, will greatly strengthen the financial position of the company.”

“A few months ago,” he continued, “we also rolled out five strategic imperatives for 2012 that will ensure a customer-centric organization as we strive to acquire and service higher quality accounts and satisfy a large and growing base of customers.”

Hafen said the company has made progress over the past three months with the five initiatives, which are: increasing overall customer focus and satisfaction; optimizing company infrastructure through technology innovation; increasing business intelligence across the organization; installing high quality, profitable accounts; and enhancing employee productivity.

In the past 18 months, Devcon, acquired by San Francisco-based Golden Gate Capital in 2009, transformed itself into a national player with more than 50 branches nationwide.

But an industry source recently told SSN that Devcon closed 25 branches in April, and is now looking to shutter other branches across the county.

Hafen in April did not specify the number of branches Devcon was closing, but told SSN the company was looking at “ways to streamline and trim so the business functions at its highest level.”

In an email interview this week, Hafen also declined to say how many branches have closed or will be suspended, but said the company will continue to maintain branches beyond its Florida base and may consider expansion to other markets later in 2012.

“Devcon pursued an aggressive growth strategy in 2011 and has since determined that it should focus on fewer markets as a way to set the stage for profitability and growth in the coming years,” Hafen said. “Devcon will maintain branch operations in Florida, Illinois, and New York and will continue to evaluate potential expansion markets later this year.”

When Devcon expanded, its total work force grew from 450 to 785. Hafen declined to reveal how may employees the company currently has, but said there will be some reductions due to branch closings.

“We anticipate that the suspension of offices will eliminate some positions due to required changes in personnel; however, the exact number of positions that will be affected remains unknown,” he said. “Nonetheless, we also are confident that such changes will increase opportunities for the company in the long run.”

As part of its nationwide expansion, Devcon opened the new national operations center in Texas, with 100 employees. Hafen told SSN this week: “The operations center in Irving will remain open in the coming months as Devcon transitions services to other locations. It is anticipated that operations in Irving will wind down by Q4 of this year.”

The suspension of branches won’t negatively impact Devcon's more than 300,000 customers—in fact, service will be enhanced, Hafen said.

“Customers will not notice or experience any changes in the services, billing, or monitoring,” he said. “Rather, Devcon is confident that such changes will only enhance the customer experience by providing even better customer service as we further implement processes and technology to more efficiently run the business and tailor Devcon’s response to customer needs.”

Hafen took the helm of Devcon in March, part of a rapid turnover at the top of the company. Golden Gate had announced in February that former Protection 1 CEO Richard Ginsburg would be CEO, then about three weeks later Ginsburg was out and Hafen, former Pinnacle Security COO, took his place.

Golden Gate also owns Pinnacle Security, an Orem, Utah-based summer-sales-model security provider, Last fall, Devcon, a traditional security company, announced a shared services agreement with Pinnacle starting in 2012. Hafen said this week: “The preferred partnership agreement between Devcon and Pinnacle has worked well and nothing will change for 2012. Devcon will continue to provide post-sale customer services to Pinnacle and other partners moving forward.”

Comments

From a local point of view competing daily against Devcon, we have seen the impact of those aggressive strategies started in 2011 by Devcon and presently in place. While we and most other dealers in Miami are selling interactive services at a rate of at least $48 per month and cell monitoring for close to that , Devcon has been offering the same services at a much lower monthly rate, which was shocking because of the large overhead they maintain compared to a local dealer. The closing down of branches then is no surprise at all, in fact it explains a lot.

Ray Perez
http://www.miamifloridahomesecurity.com